A4077 2R

An Act imposing taxes and fees on operators of private prisons and supplementing Title 54 of the Revised Statutes.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. Sections 1 through 4 of P.L. , c. (C. ) (pending before the Legislature as this bill) shall be known and may be cited as the “Knowledge, Accountability, and Rights in Incarceration Markets Act.”

2. a. For the purposes of this section:

“Director” means the Director of the Division of Taxation in the Department of the Treasury.

“Public entity” means any federal, State, county, or municipal entity.

b. A taxpayer that operates a private correctional facility in the State and has entered into a contract with a public entity for the provision of correctional services, shall be subject to a fee based on the value of ¹[such] the¹ contract with the public entity during each year in which the contract is in effect. The amount of the fee shall be equal to eight percent of the consideration given, or contracted to be given, by the public entity to the taxpayer for the provision of correctional services.

c. Every taxpayer subject to the fee imposed pursuant to subsection b. of this section shall annually file a return for the preceding calendar year with the director on such forms as the director shall prescribe. The return shall indicate the total dollar value of the contract entered into by the taxpayer for the provision of correctional services and include a copy of ¹[such] the¹ contract. At the time a return is filed pursuant to this subsection, a taxpayer shall remit the full amount of the fee due.

d. A taxpayer that fails to file a return when due or fails to pay the amount of the fee when due shall be subject to such penalties and interest as shall be provided by the director.

e. There is established a special, nonlapsing account within the General Fund, to be known as the “Detention and Deportation Defense Initiative Support Fund,” into which all revenues generated from the fee imposed pursuant to ¹subsection b. of¹ this section shall be credited. The monies in the account shall be dedicated and annually appropriated by the Legislature to the Department of Human Services to support the provision of legal services by accredited institutions of higher education through the Detention and Deportation Defense Initiative, or any other successor initiative or program.

3. a. For the purposes of this section ²[¹[:

“Director”], “director”¹] : Director² means the Director of the Division of Taxation in the Department of the Treasury.

²“Nonprofit organization” means an organization that is exempt from federal taxation pursuant to Section 501(c)(3) of the federal Internal Revenue Code (26 U.S.C. s. 501(c)(3)).²

b. A taxpayer that operates a private correctional facility in the State shall be subject to a fee based on the number of inmates who are detained at the taxpayer’s private correctional facility. The amount of the fee shall be $15 per inmate for each day ¹[such] an¹ inmate is detained at the taxpayer’s private correctional facility in a month.

c. Every taxpayer subject to the fee imposed pursuant to subsection b. of this section shall file a return for the preceding month with the director on such forms as the director shall prescribe. The return shall indicate the total number of inmates detained at the taxpayer’s private correctional facility during the preceding month and the number of days during that month in which such inmates were detained by the taxpayer. At the time a return is filed pursuant to this subsection, a taxpayer shall remit the full amount of the fee due.

d. A taxpayer that fails to file a return when due or fails to pay the amount of the fee when due, shall be subject to such penalties and interest as shall be provided by the director.

e. There is established a special, nonlapsing account within the General Fund, to be known as the “Private Prison Societal Rehabilitation Support Fund,” into which all revenues generated from the fee imposed pursuant to ¹subsection b. of¹ this section shall be credited. The monies in the account shall be dedicated and annually appropriated by the Legislature to support community-based programs related to food security, housing, recreation, job training, and youth mentorship. ²The monies in the account may be appropriated by the Legislature to a nonprofit organization that operates a community-based program related to food security, housing, recreation, job training, or youth mentorship to support that community-based program, including a nonprofit organization affiliated with a religious organization that has a documented history of operating such a program.²

4. a. For the purposes of this section:

“Allocated taxable net income” means taxable net income as defined in subsection (w) of section 4 of P.L.1945, c.162 (C.54:10A-4).

“Combined group” means a combined group as defined in subsection (z) of section 4 of P.L.1945, c.162 (C.54:10A-4).

“S corporation” shall mean a New Jersey S corporation, as defined in subsection (p) of section 4 of P.L.1945, c.162 (C.54:10A-4), which does not make an election to be taxed as a C corporation pursuant to either subsection (ff) ¹of section 4¹ of P.L.1945, c.162 (C.54:10A-4) or subsection d. of section 3 of P.L.1993, c.173 (C.54:10A-5.22).

“Taxpayer” means any business entity or combined group that is subject to tax, as provided in the Corporation Business Tax ¹Act¹ (1945), P.L.1945, c.162 (C.54:10A-1 et seq.), except not including any S corporation.

b. In addition to the tax paid by each taxpayer determined pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5), a taxpayer that operates a private correctional facility in the State shall be assessed a private prison surtax equal to three percent of the taxpayer’s allocated taxable net income during each privilege period. The private prison surtax shall be due and payable in accordance with section 15 of P.L.1945, c.162 (C.54:10A-15), and the private prison surtax shall be administered pursuant to the provisions of ¹the Corporation Business Tax Act (1945),¹ P.L.1945, c.162 (C.54:10A-1 et seq.). Notwithstanding the provisions of any other law to the contrary, no credits shall be allowed against the private prison surtax liability computed under this section except for credits for installment payments, estimated payments made with a request for an extension of time for filing a return, or overpayments from prior privilege periods.

c. The gross amount of all revenues generated from the private prison surtax imposed pursuant to this section shall be credited to the “Private Prison Societal Rehabilitation Support Fund” established pursuant to subsection e. of section 3 of P.L. , c. (C. ) (pending before the Legislature as this bill), except for amounts credited to the special account in the General Fund created pursuant to Article VIII, Section II, paragraph 6 of the New Jersey Constitution. The monies credited to the fund pursuant to this section shall be used for the fund’s authorized purposes, provided that one percent of the private prison surtax revenues shall be appropriated to support programs provided by the State, one percent of ¹[such] the private prison surtax¹ revenues shall be appropriated to support programs provided by the county in which the private correctional facility of the taxpayer is located, and one percent of ¹[such] the private prison surtax¹ revenues shall be appropriated to support ¹[programs] police and fire services¹ provided by the municipality in which the private correctional facility of the taxpayer is located.

5. The Director of the Division of Taxation ¹in the Department of the Treasury¹ shall, in accordance with the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), adopt rules and regulations as necessary to implement the provisions of P.L. , c. (C. ) (pending before the Legislature as this bill).

6. This act shall take effect immediately and shall apply to taxable years and privilege periods beginning on or after January of the year next following the date of enactment.